___________

No. 95-2980

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Richard D. Carlson; Dale Summy, *

*

Petitioners, *

*

v. * Petition for Review of an Order

* of the United States Department

The United States Department of * of Housing and Urban 

Housing and Urban Development * Development.

(HUD), on behalf of James O. *

and Delores Bad Horse and * [UNPUBLISHED]

Christina Antelope (minor *

child), *

*

Respondent. *

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Submitted: March 13, 1996

 Filed: April 5, 1996

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Before FAGG, BRIGHT, and WOLLMAN, Circuit Judges.

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PER CURIAM.

Richard D. Carlson owned a duplex in Sioux Falls, South Dakota.

After Carlson moved out of state, his friend Dale Summy helped Carlson rent

the duplex to various tenants. On one occasion Summy rented the building's

small upstairs apartment to James O. Bad Horse, who told Summy he would be

living in the apartment with his wife and one child. The day the Bad

Horses moved in, a tenant living downstairs called Carlson to complain that

the Bad Horses had damaged the yard and the building during the move. The

complaining tenant also indicated there were four or more people living in

the upstairs apartment. Carlson then instructed Summy to ask the Bad

Horses to leave. The Bad Horses moved out as requested and filed a housing

discrimination complaint. After an investigation, the Secretary of the

United States Department of
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Housing and Urban Development (HUD) charged Carlson and Summy with family

status discrimination. An Administrative Law Judge (ALJ) initially

dismissed the charges, but the Secretary remanded the case for

reconsideration. On remand the ALJ concluded Carlson and Summy had

unlawfully enforced a policy having a disparate impact on families with

children, and Carlson had made a statement indicating a preference not to

rent to families. The ALJ found no intentional discrimination, however.

The ALJ awarded damages to the Bad Horses, imposed civil penalties, and

enjoined future discrimination. Carlson and Summy petition for review of

the ALJ's final order. See 42 U.S.C. § 3612(i)(1) (1988). We grant the

petition and reverse.

The ALJ found Carlson and Summy did not refuse to rent to families

with children, but enforced a neutral policy of not permitting more than

three people to occupy the upstairs apartment. Based on census data, the

ALJ concluded the policy had a disparate impact on families with children

and thus violated the Fair Housing Act. See 42 U.S.C. § 3604(a) (1988);

United States v. Badgett, 976 F.2d 1176, 1179 (8th Cir. 1992). Carlson and

Summy contend the ALJ's decision is not supported by substantial evidence,

and we agree. See Morgan v. Secretary of HUD, 985 F.2d 1451, 1457 (10th

Cir. 1993). Carlson concedes he preferred to rent the upstairs apartment

to three or fewer people because the apartment is small, but the

overwhelming weight of the evidence shows Carlson never actually limited

the number of occupants in the apartment. Carlson and Summy rented the

apartment to anyone who wanted to live there, including families of four.

In fact, a family of four moved into the apartment shortly after the Bad

Horses left. 

The Secretary relies on a letter Carlson wrote HUD which states

Carlson asked the Bad Horses to leave because they had a dispute with the

tenant downstairs and because Carlson believed there were four people

living in the Bad Horses' apartment. The Secretary also points to a letter

from Summy containing similar
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statements. We must view the letters in light of the whole record, see

id., including Carlson's continuous practice of renting to any size family,

his legitimate concern about the downstairs tenant, and his belief that the

Bad Horses had lied about the number of people who would be living in their

apartment. The record simply does not support the ALJ's decision that

Carlson and Summy were enforcing a three-person maximum when they asked the

Bad Horses to move out.

We also reject the ALJ's conclusion that Carlson violated 42 U.S.C.

§ 3604(c) (1988) by making a statement indicating a preference not to rent

to families with children. The ALJ found Carlson told Summy to rent the

upstairs apartment to a "single person, or at most a married couple/two

single persons." Carlson and Summy never mentioned this comment to

prospective tenants or anyone else, and there is no substantial evidence

that Summy believed Carlson was asking him not to rent to families. Summy

was Carlson's personal friend and knew Carlson had rented to families in

the past. Summy continued to rent the upstairs apartment to families with

children, including the Bad Horses and the family that moved in after the

Bad Horses. We see no violation of § 3604(c).

We grant the petition for review and direct the Secretary to dismiss

the charges against Carlson and Summy. 

A true copy.

Attest:

CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.